Draft Loan Agreement

---
name: draft-loan-agreement
task_id: real-estate/draft-loan-agreement
description: Guides drafting of a construction-to-mini-perm loan agreement by reconciling economic terms across source materials and producing both the loan agreement and a cover memo flagging material inconsistencies with proposed resolutions.
activates_for: [planner, solver, checker]
---

# Skill: Draft Commercial Real Estate Construction Loan Agreement for Mixed-Use Development

## 2. Failure modes the skill is correcting

- Drafting from the term sheet alone and missing qualifications, exceptions, or conditions stated in the credit memo, appraisal, title materials, environmental report, organizational materials, or draw schedule.
- Carrying forward economic terms without reconciling them against the project budget, timing assumptions, and draw mechanics, which can make the facility internally inconsistent at closing or during funding.
- Treating construction disbursement mechanics as boilerplate and failing to align advances, reserve funding, retainage, and completion conditions with the actual project cash flow.
- Omitting the separate cover memorandum that must identify cross-document conflicts and recommend a resolution path.
- Misstating the borrower’s entity structure, signatory authority, guarantor posture, or SPE covenants because the draft was not tested against the organization materials.
- Ignoring title, environmental, or appraisal exceptions that affect closing deliverability, lien priority, or underwriting assumptions.
- Drafting a mini-perm conversion structure without specifying the operational test, measurement period, and conversion conditions that govern the post-construction phase.

## 3. Legal frameworks / domain conventions that apply

- Construction-to-mini-perm structure: the agreement should bridge a development-period facility into a stabilized permanent phase, with clear conversion conditions, maturity mechanics, and post-conversion amortization or extension terms.
- Loan economics: principal amount, advance mechanics, interest rate, reserve accounts, fees, maturities, extension rights, and any rate-fallback language must be harmonized across the source set before drafting.
- Draw administration: advances ordinarily depend on lender inspection, architect certification, lien waivers, no-default certificates, and budget compliance; the draw schedule should track the approved uses and timing assumptions.
- Reserve and retainage mechanics: interest reserve, contingency reserve, and contractor retainage should be drafted to match the construction budget and funding cadence reflected in the source documents.
- Completion support: if a completion guaranty or cost-overrun support is contemplated, the obligor, trigger, and scope of recourse should match the transaction materials and the borrower structure.
- SPE and authority covenants: the borrower should be described consistently with its organizational documents, ownership chart, and authorization evidence; governance restrictions should track the intended single-purpose structure.
- Title and lien priority: the mortgage and related collateral package should be drafted for first-priority secured status subject only to permitted exceptions, with open title issues flagged for cure or endorsement.
- Environmental diligence: disclosed environmental conditions should be reflected in the indemnity, closing conditions, and any further investigation or remediation obligations.
- Appraisal and underwriting metrics: valuation, leverage, and stabilized-value assumptions should be checked against the debt sizing and closing conditions; any mismatch should be called out rather than silently normalized.
- Governing legal authorities: use the controlling local real-property, lending, recording, and environmental disclosure framework reflected in the source set; where the materials reference a statute, regulation, rule, or industry standard, carry that authority forward by name and section.

## 4. Analytical scaffolds

- Assemble a term matrix covering borrower, property, collateral, principal amount, pricing, reserves, maturity, extension rights, conversion conditions, and default triggers; compare each item across every source document before drafting operative text.
- Read the draw schedule alongside the budget and funding assumptions; test whether the reserve structure, holdbacks, and advance conditions can support the projected disbursement path without a funding gap.
- Compare underwriting metrics in the appraisal and credit memo against the proposed loan sizing and collateral package; identify where the draft should preserve a condition, limitation, or disclosure rather than assume consistency.
- Review the organizational chart and authorizing resolutions together; identify the legal borrower, equity owner, guarantor, and signatory chain; draft entity and authority provisions to fit that structure rather than a generic template.
- Review the title commitment, survey-related references if present, and any listed exceptions; determine which items should be cured, subordinated, insured over, or expressly permitted.
- Review the environmental report for recognized conditions, historical use concerns, or recommended follow-up; convert those findings into conditions precedent, representations, indemnities, and post-closing covenants as appropriate.
- For each cross-document discrepancy, record: the conflict, the controlling source, the legal or drafting consequence, and the proposed fix.
- Draft the loan agreement as the primary deliverable first; prepare the cover memorandum only after the draft exists and is complete enough to support issue spotting.
- If only one source document addresses a topic, say that it is the lone source for that term and note whether the absence of corroboration should be confirmed before execution.

## 5. Vertical / structural / temporal relationships

- Construction period precedes mini-perm conversion: funding conditions, reserve mechanics, and project completion covenants govern the initial phase; stabilized operation tests and extension options govern the post-completion phase.
- Draws, inspections, and lien waivers are sequential: each advance should follow certification, with retainage and holdbacks preserved until the conditions for release are met.
- Title and environmental issues have closing priority: unresolved exceptions, undisclosed encumbrances, or material environmental concerns can block lien perfection or delay funding.
- Organizational authority and completion support interact: if the guarantor, equity holder, and managing party overlap, draft transfer, control, and authority provisions to avoid inconsistency.
- Conversion conditions should turn on objective performance metrics and a defined measurement period, not on vague satisfaction standards.

## 6. Output structure conventions

- Loan agreement draft: produce a complete operative agreement with conventional real-estate finance articles, schedules, exhibits, and defined terms as needed for the transaction, not a summary of terms.
- Cover memorandum: use a conventional issues-and-resolutions format organized by topic or source document pairing; for each item, state the issue, the controlling source, the recommended resolution, the downstream effect if unresolved, and the responsible follow-up.
- Keep the draft and memo distinct in tone and purpose: the agreement should read as binding contract language; the memorandum should read as internal advisory analysis.
- Preserve internal consistency across definitions, conditions precedent, representations, covenants, events of default, and exhibit references.
- Before finalizing, confirm that the loan agreement file is the primary deliverable, is non-empty, and contains operative clauses; confirm that the cover memorandum is also complete and tracks the identified material issues.